Electric vehicles save families money

January 23, 2025 | Chandler Sanchez, Transportation Research Fellow

———————

Just after his inauguration as America’s 47th president, Donald Trump signed an executive order taking aim at a variety of policies that are helping to advance transportation electrification in the Southwest and across the country. While these actions will take a while to play out, we at the Southwest Energy Efficiency Project (SWEEP) believe that it is important to understand that these policy changes will largely affect how fast clean vehicle technologies will become dominant – not about whether the transition will happen at all. 

There are fundamental reasons why people are turning towards electric vehicles (EVs) that do not depend on policy. One of the most important reasons is that EVs are about four times more energy efficient than vehicles that run on petroleum. That means they can save drivers money. The desire to save money is – and will continue to be – a powerful force driving the expansion of the EV market, for the next four years and beyond.

Electric vehicles save money on fuel

To help illustrate the potential for cost savings, SWEEP researchers pulled together a database estimating how much a typical driver in each county in the U.S. Southwest could save on fuel by switching to an EV. We compiled the best available local residential electricity rates for most utilities in the region, statistics from the U.S. Census about how much a typical local family drives per year, vehicle fuel efficiency information, and recent local gasoline prices (circa December 2024). [See the Methodology section at the end of this blog for a detailed explanation of where our numbers come from.]

Overall, we found that EV drivers can save on the order of $1,000 per year per vehicle on fuel compared to vehicles that run on petroleum. In many cases, driving on electricity is comparable to gasoline prices at less than a dollar per gallon. Fuel savings can amount to a few percent of a typical households’ annual income – money that families could use to spend on other priorities – whether that’s housing, food, clothing, or child care. 

For example, 

• If a family in the Phoenix suburbs replaces an average petroleum-powered large SUV with a comparable electric model, they could save over $1,100 per year on fuel. That’s comparable to gasoline at $0.71 cents per gallon.
• A family in Provo could save $1,500 per year on fuel by switching an average combustion pickup truck for an electric version. That’s about 2.6% of the typical household income in Utah County.
• A worker in the Las Vegas area who relies on a sedan to commute to the city could save almost $1,100 a year on gas just by switching to an electric model. That’s comparable to gasoline at less than 60 cents per gallon.
• A family in Las Cruces, New Mexico could save $1,100 per year on fuel by switching from an average crossover to a new electric model. That’s more than 3% of the average annual household income in the area.
• If a family in Thornton, Colorado upgraded their small gasoline-powered crossover to one that runs on electricity, they could save almost $750 per year on fuel. The total cost to power that EV for about 9,000 miles of annual driving would be just $350, compared to $1,100 for gas, even with recent gas prices below $2.80 per gallon.

If you compare a new combustion vehicle to a new EV, available savings will be a bit less, since new combustion vehicles tend to be a bit more efficient than ones already on the road. However, no combustion vehicle can match the efficiency of a comparable electric model, and savings are available in all cases.

To look at the results in your area, click here and explore our database.

The exact amount of money you can save depends on:

• What kind of vehicle you are replacing, and how efficient it is 
  • Replacing an older gas guzzler with a new EV will increase savings;
• How much you drive 
  •  The more you drive, the more you can save by driving an EV;
• How expensive gasoline is
  • The higher the cost for petroleum, the bigger the advantage for EVs;
• What kind of electricity rate you have access to
  • If you can charge at home on a residential electricity rate, instead of depending on public charging, you will save more (and the tool here assumes 100% at-home charging);
  • Some utilities offer special rates that offer discounts for off-peak EV charging (often at night when there’s spare capacity on the grid);
  • Residential electricity rates differ between utilities – the lower the rate, the higher your savings will be;
• The efficiency of the new EV
  • Most EV models are very efficient, however there are a few outliers with higher electricity consumption per mile.

Fuel costs for EVs are more stable and predictable than gasoline prices. In the case of investor-owned utilities, public utility commissions carefully monitor costs and regulate utility business practices. For cooperative and municipal utilities, boards of directors and elected officials serve the same need. In contrast, gasoline prices are subject to the whims of the global market, which can be affected by production quotas, local or regional conflicts, or other interruptions in supply. 

In addition to fuel savings, EVs offer savings on maintenance and often overall savings on total cost of ownership.

EVs are mechanically simpler than vehicles that run on gasoline or diesel, with fewer moving parts and fluids or belts that need to be changed. Consumer Reports has found that EV maintenance costs are about half of those for combustion models, with EV owners typically saving about $4,600 over the life of the vehicle.

At the same time, as scale increases, manufacturers are able to assemble EVs at lower costs. Battery prices in particular are dropping fast. That translates into lower prices for consumers. In 2024, Bloomberg reported that “at least three manufacturers – Tesla, Hyundai-Kia and General Motors – now offer EVs with more than 300 miles (480 kilometers) of range for less than the cost of the average new vehicle sold in the US […]. The most affordable is Hyundai’s 2024 Ioniq 6, which comes with 361 miles of range and a price tag that’s 25% below the national average of roughly $47,000.”

The International Council on Clean Transportation projects that EV manufacturers will continue to be able to wring efficiencies out of their processes and lower costs, while most advances in combustion technology have already been captured. In other words, experts expect the total cost advantage of EV technology to grow over time.

Want to compare the total cost of ownership of specific vehicles in detail? Try out this Department of Energy online calculator (although note that it may not capture all of the subtleties, such as whether a vehicle qualifies for a tax credit or not, or whether your utility offers special low-cost rates for EV charging or not). Or, take a look at this total cost of ownership analysis by the Environmental Defense Fund.

Saving money matters

Transportation is the second highest expenditure for residents in Western states, with nearly 20% of households’ post-tax income going to transportation, and in the Southwest households can expect to spend over $3,000 annually on gasoline to power their existing vehicles. Switching to an EV, even over the most new and efficient gas vehicle, can save families a significant amount of money, providing relief in a time when the financial pressure of inflation is still being felt by many. In 2024 alone, the U.S. The Department of Treasury and IRS found that consumers who switched to an EV saved an estimated $262 million in annual vehicle costs, with that number projected to balloon to $3.2 billion of vehicle-related costs over the vehicle’s lifetime.

Polices to save families money

The federal government, Southwest states, and local governments have adopted a variety of policies to help vehicle electrification expand, including tax credits or rebates to support EV purchases; fuel economy and pollution standards; the Advanced Clean Cars program; utility and public investments in charging infrastructure; EV-ready building codes, and more. Two of the major goals behind these policy measures are to help people and businesses save money, while reducing pollution.

The Trump Administration has suggested it plans to repeal the federal EV tax credit. It is also likely to withdraw EPA waivers allowing states to implement their own tailpipe emission standards (the Advanced Clean Cars Program), while weakening federal fuel economy and pollution rules. Some of these actions would require an act of Congress; while others would require public rulemakings, which could be the subject of legal challenges. 

While these efforts play out, we urge people to remember that underneath the policy conflict, what we’re actually talking about here is saving families money. The EV industry has made enormous strides since the 2010s, and the technology is ready for prime time. Policy changes could slow down the progress we are making, but it cannot change the fundamental fact that EVs are more efficient than combustion technology, and offer the potential for cost savings that can make a real difference in families’ lives. 

Federal decision-makers should look for opportunities to help more people get access to opportunities to save money. State and local leaders should continue to invest in clean transportation, build out the necessary infrastructure, and ensure that people across the income spectrum have access to cost savings. 

Together, we can keep charging ahead toward a better, cleaner, more affordable future for everyone.

Methodology

SWEEP researchers calculated potential fuel savings for EVs by county in the U.S. Southwest using data on local electric utility residential rates, local driving patterns, local gas prices, and vehicle fuel efficiencies. Our database assumes that 100% of vehicle charging will be done at home on a residential electricity rate (and thus savings numbers are best-case). The data does not necessarily apply to residents of multifamily buildings, who often face obstacles accessing charging infrastructure and/or accessing the most affordable EV charging rates.

Data sources

Best available residential electricity rates

To begin, SWEEP researchers compiled the best available residential electricity rate for public, cooperative and municipally-owned utilities across the U.S. Southwest. We identified utilities using bundled residential utilities retail sales data from the U.S. Energy Information Administration. We then assigned one utility to each county based on our best judgment for where the bulk of county residents obtain their electricity. (Note that some counties are served by multiple utilities. To simplify our work, we assigned only one utility per county. Note that the tool shows which utility we assigned to the county below the savings graph.)

For each utility, we looked up residential rate information, and identified the best available rate for EV charging – whether a specific EV rate, a whole-house time-of-use rate, or a generic residential rate. For time-varying rates with seasonal variations, we annualized the rate assuming that the amount of charging would be the same every month year round. We assume optimal charging behavior – at home, during the lowest cost hours. 

Typical driving behavior and demographic data

We obtained driving behavior and demographic information by county from the U.S. Census, as compiled by the Center for Neighborhood Technology in its Housing and Transportation Affordability Index tool. The tool provided average vehicle miles traveled (VMT) per typical household by county, as well as data on the average amount of vehicles owned per typical household by county. To determine the average VMT per vehicle, we divided household VMT by the number of vehicles owned. 

Fuel economy data

We obtained fuel economy data for light-duty combustion vehicles from the EPA’s 2024 Automotive Trends Report. Specifically, we exported Table A: Detailed Real World Fuel-Economy, CO2 Emissions and Vehicle Attribute and Technology Data; A6: Detailed Data by Engine Package. We removed values representing battery electric or plug-in hybrid EVs. We then calculated a production-weighted fuel efficiency by year for four main classes of vehicles in the EPA database: Sedan/Wagon; Car SUV; Truck SUV and Pickup Truck. According to the Bureau of Transportation Statistics, the average car on U.S. roads is 14 years old, and the average light truck is 12 years old. Accordingly, to represent the average vehicle on the road, we selected fuel economy data from 2011 for sedans, wagons, and car SUVs; and fuel economy data from 2013 for truck SUVs and pickup trucks. For new vehicles, we used the production-weighted average fuel efficiency by vehicle category for 2023 (the most recent year with fully complete data in the EPA report). 

We obtained data on the fuel efficiency of 2024-25 model battery electric vehicles from fueleconomy.gov, using the EPA combined city/highway metric in kilowatt-hours per mile. Representative sedan/wagons include the Chevy Equinox or Tesla Model 3; car SUVs include the Hyundai Kona or Tesla Model Y; Truck SUVs include the Kia EV9 or Rivian R1S; pickups include the Ford Lightning, Chevy Silverado, or Rivian R1T.

Gas prices

We looked up a snapshot of county-specific gas prices at the AAA Fuel Price Index on January 22nd, 2024. Where county-level data was not available, we substituted the state’s average gas price. Higher gasoline prices would increase available savings (and lower gasoline prices would decrease them).

Calculations

• We calculated the annual fuel cost for a gasoline vehicle according to the following formula:
  • Annual Fuel Costs of a Gas Vehicle = [Gas Price ($/gal) x Annual Vehicle VMT (miles/yr)] / Fuel Economy (miles/gal)
• We calculated the annual fuel cost for an EV according to the following formula:
  • Annual Fuel Costs of an EV = Electricity Rate ($/kWh) x Annual Vehicle VMT (miles/yr) x Fuel Economy (kWh/mile)
• We translated annual fuel costs of EVs into a comparable gasoline price for illustrative purposes, using the following formula:
  • Electricity cost in $/gal equivalent = Vehicle Fuel Economy ($/gal) x [Annual Vehicle VMT (miles/yr) / Annual EV fuel cost ($/yr) ]

Comparisons

The tool uses filters and basic equations to determine location and vehicle scenario-based  annual fuel costs, with savings found by subtracting the annual fuel costs of a gas vehicle from the annual fuel costs of an EV of the same model in the same county. 

If you have any questions about data sourcing or the methodology used, please contact Chandler Sanchez at csanchez@swenergy.org.

The post Electric vehicles save families money first appeared on Southwest Energy Efficiency Project.